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October 24, 2017

MIAMI SHORES VILLAGE

POLICE OFFICERS’ RETIREMENT SYSTEM BOARD MEETING

The Miami Shores Village Police Retirement Board and General Employee Pension Board jointly met on Tuesday, October 24 2017 at the C. Lawton McCall Community Center. The Police Officers’ Retirement Board meeting was called to order at 8:27 AM. The following individuals were present for the meeting:

The Chairman asked to table the election for a Secretary for the next meeting when there is a full Board.

AUDIT

Mr. Enrique Llerena discussed the Miami Shores Village, Florida General Employees and Police Officers’ Retirement System Villages Reporting for the Fiscal Year Ended September 30, 2016. Trustee Williamson asked Mr. Llerena why this audit report is been presented so late in the year. Mr. Llerena advised the Board that this was a clean audit and the reason he is presenting the audit at this time is because he was asked by the Board to present at this time, however, the audit was fully completed May 2017. Trustees requested future audits be circulated to the trustees as soon as they are complete. Mr. Falcon advised the Board he would circulate the audit as soon as it becomes available to him.

Trustee Bolton asked Mr. Llerena how long he has been performing the audit for the village and how was his firm chosen to do the audit, Mr. Llerena responded that his firm has been doing the Village’s audit for about 5 years and his firm was elected via an RFP.

The Chairman asked Mr. Llerena to explain Florida PRIME, Mr. Llerena advised that Florida PRIME is a pool that the Plans invest with and has low volatility. She also asked if this is included in the CAFR and is available to the residents. Mr. Llerena responded affirmative.

Attorney Levinson reminded the Board that these types of audit are required by state law annually and one of the questions the trustees would want to know is if the auditor received full cooperation in terms of obtaining all the information necessary to perform the audit from the service providers; for example the administrator, investment consultant, custodian, legal, etc.? Mr. Llerena said he received full cooperation from all parties. Attorney Levinson asked Mr. Llerena if while performing the audit anything seemed unusual and are the internal controls in place working the way they should. Mr. Llerena said there were no items that were unusual and the internal controls in place are working properly. Attorney Levinson asked Mr. Llerena if the administrative fees for example investment, actuarial, custodian, legal and administrator seem reasonable. Mr. Llerena responded that the expenses were all in line for the size of the fund and investments.

Trustee Bolton asked Mr. Llerena if the numbers on the audit report are numbers that he has verified and confirmed against the reports. Mr. Llerena responded affirmative. 2

Mr. West advised the Board that the methodology he uses which is industry standard for calculating investment returns, is not the same methodology used by auditors and actuaries. However, although there are three different methodologies, Auditor, Actuary and Investment the results while not exact are very similar.

Trustee McDonald moved approval of the Miami Shores Village, Florida General Employees and Police Officers’ Retirement System Villages Reporting for the Fiscal Year Ended September 30, Trustee Bolton seconded the motion and the motion passed unanimously

APPROVAL OF MINUTES – July 25, 2017

The Chairman asked if anyone had any questions regarding the minutes of the meeting held July 25, 2017, there being no questions,

Trustee Bolton moved approval of the July 25, 2017 Board meeting minutes. Trustee McDonald seconded the motion and the motion passed unanimously

PUBLIC COMMENT:

None

APPROVAL OF PAYMENT WARRANT: 2017-0012

The Chairman asked if anyone had any questions regarding Warrant 2017-0012, there being no questions,

Trustee McDonald moved to approve Payment of Warrant number 2017-0012. Trustee Mauda seconded the motion and the motion passed unanimously.

RATIFY PAYMENT WARRANT: 2017-0009 and 2017-0011

The Chairman asked if anyone had any questions regarding ratification of Warrants 2017-0009 through 2017-0011, Trustee Bolton asked what the Holland & Knight invoices were for. Mr. Falcon advised the Board these invoices are for the purposes of the IRS determination letter. Trustee Bolton asked how Holland and Knight was hired, attorney Levinson responded Holland & Knight was put in place by their prior attorney. Trustee Bolton asked if the Plan will continue to use Holland & Knight in the near future or are their services complete. Attorney Levinson said Holland & Knight is a well-respected firm and they are very familiar with the Village, therefore, should the Plan require additional services from Holland & Knight pertaining the IRS determination letter they would continue using them until this process is finalized. However, his firm does have other attorneys who handle IRS determination letter process. Moving forward there will be no need for additional IRS determination letters as this is no longer a requirement.

Trustee Bolton moved to ratify payment of Warrants 2017-0009 through 2017-0011 as presented. Trustee McDonald seconded the motion and the motion passed unanimously.

INVESTMENT

For the benefit of the new trustee, Mr. West gave a brief background of AndCo Consulting. He discussed the new ownership structure of the company in terms of its owners/partners and how this partnership is finalized. They are and remain an independent consultant and believe this is a very important model for the Board to have. The firm is based on total transparency. The firm does not receive other sources of revenues other than the fees that have been established for the account on a quarterly basis. On an annualized basis they provide the auditors with their partner financial reports that confirm their fee structure. They work closely with the actuary and work out what the liability is and put together a program that meets the minimum funding requirement. 3

After giving the Board a brief status of the current investment market situation, he discussed the Miami Shores Village Police Officers Pension Fund Investment Performance Review Period Ending September 30, 2017.

● Returns were positive for major equity and fixed income indices for the 3rd quarter of 2017.

● International equity market benchmarks continued to outpace U.S. markets through the 3rd quarter of 2017 as both developed and emerging market international equities saw benefits from continued strength in global macroeconomic data, a weakening U.S. Dollar and ongoing accommodative global central bank policies.

● The yield curve continued to flatten through the 3rd quarter of 2017 as interest rates rose slightly from the prior quarter, but with greater magnitude in short-term maturities.

● Despite political gridlock in Washington, increased aggression between the U.S. and North Korea and several major weather events, including three hurricanes that caused catastrophic damage to Texas, Florida and Puerto Rico, domestic equity prices pushed higher during the 3rd quarter.

● Small cap stocks were the best performing capitalization segment across the spectrum for the 3rd quarter, bucking a year-to-date trend of large cap outperformance.

● The 3rd quarter built on year-to-date trends as growth style indices outperformed their value counterparts.

● Domestic equity valuations appear stretched relative to historical levels based on Forward Price/Earnings ratios (P/E), with even the most reasonably valued indices trading well above their historical P/E valuations.

● Sector performance within the Russell 1000 Index was largely positive for the 3rd quarter.

● Small cap sector results generally outperformed their large capitalization counterparts for the quarter.

● Using S&P 500 sector valuations as a proxy for the market, Forward P/E ratios for eight of the GICS sectors were higher than their long-term averages at quarter-end.

Mr. West advised the Board that at this time there are no recommendations. As it stands, all the investments in the portfolio are working as expected.

Mr. West advised the Board that as an advisor he is not allowed to make a recommendation or vote on the proxy received from Greatbanc Trust Company regarding the Vanguard Funds. He advised the Board that this proxy is more of a social investment issue and his thought would be to vote in favor with the management recommendation. Attorney Levinson advised the Board that they have three options, option 1) is to not vote, option 2) they can vote in favor of the Vanguard’s management recommendation and 3) to vote against Vanguard’s management recommendation.

Trustee Bolton moved to vote on the Vanguard Proxy as per the Vanguard’s management recommendation trustee McDonald second the motion and the motion passed unanimously.

ATTORNEY

Attorney Levinson asked the trustees if they had completed and turned in Form1 and for the new trustee he advised him to contact him or the administrator in order to comply with requirement. For the sake of the new trustee he went over the general background of the sunshine law and how it pertains to trustees.

Attorney Levinson discussed the composition of the Pension board. He pointed out the fifth trustee shall be chosen by a majority of the previous four trustees. If the Board wishes to re-elect the fifth trustee they can do so. 4

The next item attorney Levinson discussed was his memorandum dated October 2017 addressed to Miami Shores Village Police Officers’ Pension Fund regarding Federal, State and Local Death Benefits. He discussed the following items:

Federal Public Safety Officer Benefits (PSOB)

State of Florida Death Benefits

Funeral Benefits (Police Only)

Health Insurance

Educational Benefits

Workers Compensation Benefits

Pension Plan Benefits

Attorney Levinson discussed his Client Memorandum dated 10/13/2017 regarding Florida Retirement System (FRS) discount rate and the fact that the Florida Retirement System’s Actuarial Assumption Conference was held to review assumptions and methods used by one of the country’s largest public retirement systems. As had been suggested last year, the FRS will be lowering its discount rate (otherwise known as the "investment earnings assumption" or "assumed rate of return") from 7.6% to 7.5%.

This concluded the attorney’s report.

ADMINISTRATOR

Mr. Falcon advised the Board that Gabriel Roeder Smith (GRS) sent a letter dated October 17, 2017 stating that as of January 20, 2017 the Florida Division of Retirement (Division) Bureau of Local Retirement Systems issued a Memorandum to announce the activation of their new online reporting portal for pension plans subject to the reporting and disclosure requirements. As a result GRS start-up fee to prepare and file the information summarized on their letter will be $1,000 - $1,250.00. The ongoing fee in subsequent years will be $400-$500.

Mr. Falcon advised the Board that the next FPPTA conference coming up will be held January 28-31, 2018 at the Hyatt Regency in Orlando and a couple of trustees expressed their desire to attend.

Trustee Bolton moved to vote approval of FPPTA conference attendance in January 28-31, 2018 for those trustees who would like to attend, trustee McDonald second the motion and the motion passed unanimously.

The Chairman asked the administrator to advice trustee Meltz of the conference accordingly.

The Chairman advised the Board that trustee Bolton’s term expires this month October 31, 2017. A trustee seat #5 is vacant, based on trustee Bolton’s expertise and contribution to this Board she would like to nominate trustee Bolton for trustee seat #5, trustee Bolton accepted.

Trustee McDonald moved to vote trustee Bolton to fill seat #5 trustee Mauda second the motion and the motion passed unanimously.

Attorney advised the Board that now that they voted for trustee Bolton to fill seat #5 the council also has a ministerial duty to ratify the vote.

There being no further business to discuss a motion was made to adjourn the meeting at 10:19 a.m. motion seconded and passed unanimously.

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